IMF Urges Support for Poorer Nations Hit by War Shocks
IMF Managing Director Kristalina Georgieva says poorer countries face rising debt costs, inflation and energy shocks from conflicts. Low-income countries now…
BANGKOK — The IMF urges support poorer nations as rising debt, inflation and war-related energy shocks squeeze low-income economies, Managing Director Kristalina Georgieva said as the fund’s annual meetings wrapped up on Saturday. The countries facing the greatest strain include oil importers, which are exposed to higher global energy costs.
The pressure has a direct cost: low-income countries now spend 8 to 14 percent of their revenue on debt repayments, Georgieva said, as higher global interest rates raise borrowing costs. That leaves less room for governments to fund domestic priorities and protect people hit hardest by inflation.
Debt and inflation squeeze low-income countries
Georgieva said discussions with policymakers reflected both confidence in the global economy and concern about risks facing poorer nations. She pointed to economic resilience and the promise of artificial intelligence, while warning that inflation, high debt, wars and climate risks remain serious worries.
“I can tell you that people everywhere, but especially in poorer countries, don’t like inflation. Inflation is like a tax on the poor,” Georgieva said.
She also said vulnerable economies are missing out on the artificial-intelligence investment boom driving growth in richer countries. At the same time, higher borrowing costs add to the burden on governments already dealing with expensive imports and repayment obligations.
Energy costs have climbed since February, when the United States and Israel launched a war on Iran. Retaliatory strikes in the Middle East and disrupted oil and gas flows contributed to the rise, according to Al Jazeera’s report on Georgieva’s remarks.
The International Monetary and Financial Committee warned that conflicts and trade tensions could add to the strain. Its statement, issued by Saudi Finance Minister Mohammed Al-Jadaan, the committee’s chairman, said disruptions to key trade routes could intensify commodity price pressures, including for refined energy products, and weaken energy and food security.
IMF says it can help restructure debt
Georgieva said the IMF has a responsibility to help countries restructure debt when needed, support efforts to mobilise domestic resources, bring in international financing and create conditions for private investment.
She said governments should set spending targets that support growth while shielding the most vulnerable. The IMF, she added, was pursuing more resources for low-income countries.
“When we do our best, it translates into better lives for people,” Georgieva said.
Georgieva also said the IMF plans to back Iraq “very firmly” through a requested loan programme. Talks with Lebanese authorities are progressing, though work remains before a programme is ready.
“We will get to Iraq both money and policy support,” she said. “In the case of Lebanon, we are in very intense discussions with Lebanese authorities. We have made significant progress towards the programme. We have still a bit more work to do together, and I’m confident we will be successful.”
Source: aljazeera.com
